To read this content please select one of the options below:

Uncovering the hidden cost of staff fraud: an assessment of 45 cases in the UK

Mark Button (Centre for Counter Fraud Studies, University of Portsmouth, Portsmouth, UK)
Dean Blackbourn (Centre for Counter Fraud Studies, University of Portsmouth, Portsmouth, UK)
Chris Lewis (Centre for Counter Fraud Studies, University of Portsmouth, Portsmouth, UK)
David Shepherd (Centre for Counter Fraud Studies, University of Portsmouth, Portsmouth, UK)

Journal of Financial Crime

ISSN: 1359-0790

Article publication date: 5 May 2015

2112

Abstract

Purpose

The purpose of this paper is to provide evidence on the additional costs of dealing with staff fraud, beyond the initial fraud loss, based on 45 cases of staff fraud.

Design/methodology/approach

The research began with a “brainstorming” session with counter fraud professionals to map all potential costs in a staff fraud. It then utilised a twin-track approach of a survey and interviews. A survey was distributed using a number of methods yielding 28 usable cases. Interviews were also sought with organisations willing to discuss staff fraud, which secured a further 17 cases. Both the survey and interview used the same questionnaire, although the latter enabled a deeper questioning of participants.

Findings

This study examined 45 cases of staff fraud from a wide range of sectors drawn predominantly from larger organisations. From each of these cases detailed, estimates of the costs of dealing with the fraud were identified. Major additional costs included the costs of investigation, staff suspensions, internal disciplinary costs, external sanctions, permanent staff replacement, miscellaneous costs as well as intangible costs. The findings identified significant costs which are significantly above the initial value of the fraud, particularly on initial frauds under £25,000.

Research limitations/implications

Staff fraud is a very sensitive subject with many organisations unwilling to reveal what happens when it occurs. The approach was therefore to secure as much data as possible and as such this might not be representative of the broader economy.

Practical implications

The paper highlights the need for greater investment in prevention given the substantial costs of staff fraud to deal with.

Originality/value

This is the first attempt to gauge the full costs of staff fraud to an organisation.

Keywords

Citation

Button, M., Blackbourn, D., Lewis, C. and Shepherd, D. (2015), "Uncovering the hidden cost of staff fraud: an assessment of 45 cases in the UK", Journal of Financial Crime, Vol. 22 No. 2, pp. 170-183. https://doi.org/10.1108/JFC-11-2013-0070

Publisher

:

Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

Related articles